Earlier this month, as its competitors were issuing foreclosure moratoriums following reports that many foreclosures were approved by “robo-signers” — employees who weren’t verifying information on the thousands of foreclosures they approved daily — Wells Fargo issued a statement reassuring everyone that its practices were sound. “Wells Fargo policies, procedures and practices satisfy us that the affidavits we sign are accurate. We audit, monitor and review our affidavits under controlled standards on a daily basis,” the bank said.
According to documents unearthed by the Financial Times, Wells may want to go back and revise that statement:
Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a “robo signer”…In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.
Ms Moua, who was deposed as part of a foreclosure lawsuit in Palm Beach County, Florida, said that the only information she verified was whether her name and title appeared correctly, according to the document. Asked whether she checked the accuracy of the principal and interest that Wells claimed the borrower owed – a crucial step in banks’ legal actions to repossess homes – Ms Moua said: “I do not.”
The timing is particularly bad for Wells, as Yves Smith reported that the bank “has been making the rounds among policy types in DC this week to tell its story that (of course) the foreclosure crisis is overblown. Moreover, Wells reportedly said that it was not like the other major servicers, that it ran a tight shop and hadn’t engaged in the bad practices of other firms, particularly the use of improper affidavits, aka robo signers.”
At this point, Wells Fargo should be joining Bank of America, JP Morgan Chase, and GMAC Mortgage in announcing a foreclosure moratorium until this mess is sorted out. JP Morgan yesterday extended its moratorium from 23 states to 41, and according to a report from the investment bank Morgan Stanley, “as many as 9 million U.S. mortgages that have been or are being foreclosed may face challenges over the validity of legal documents.”
JP Morgan has even gone so far as to set aside $1.3 billion to cover potential legal costs that will emerge as a result of the ongoing scandal, and an additional $1 billion for mortgage-buybacks that may result from investors proving that the bank sold them bogus securities. Wells Fargo is the second largest mortgage servicer in the country (behind only Bank of America), and with the herd mentality of the industry, I’d be surprised if Wells’ practices were dramatically different from those of its competitors. So it’s time for the bank to pull the plug on its foreclosure machine until it can detail the extent of its problems.
Read more in today’s Progress Report, “Investigating Foreclosure Fraud.”